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dswinters (94.08)

Tale of the Inefficient Market: Japan and Netflix

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March 15, 2011 – Comments (2) | RELATED TICKERS: EWJ , NFLX , JNJ

As the country of Japan begins to sort through the mess and start to pick up the pieces, Netflix keeps storming ahead. This is a tale of the inefficent Market. Ok ok....I went short the EWJ. This is the case because I think the country will have a heck of a time the next few months and years, but this Japan. This is/was the 3rd largest economy that recovered from WWII. This is not about the country, it is about the people and their culture. It is about the drive to innovate and work for the higher cause. This is the country where the 'company man' was founded and will rise again.

 I maybe short Japan in the short them, but that's just a fast trade, in the next few years Japan will be back. They understand and celebrate capitalism and can allocate dollars as good as anyone. My heart goes out to the Japanese people, but we know you will rise again.

 Meanwhile, Netflix storms down the road with a P/E in the 70's and a Stock price in the 200's. Great company that seems like it forgot about the tech bubble bursting. I think the stock is worth 100 bucks at best. 100 bucks would still be a P/E of 35. They cannot possibility keep this kind of growth rate. Even the insiders agree, Reed Hastings has dump stock all the way up, he knows his company is very over priced, my questions is....when is it going to fall? I am keeping my short on the company even though I am a huge loser (currently).

 Finally, I think the market has some difficult days ahead, the Japanese crisis should drive down the price of oil back to the low 90's. However, the job market and credit markets are still very rough. Social services and government handouts are at risk of killing not only the American economy, but many other countries around the work. These services will have to be cut and some sort of taxes will have to be added and/or raised. However, I hope the government sees the bigger picture and cuts corp and business taxes and raises individual taxes. I know this may make me sound pro-big business, but from my understanding, our standard of living is going to be somewhat constant and in order to fight the unemployment rate I would rather see business spending money to keep employees and having the employees bear the higher tax because at least they will have a job to support. Yes.... this may drive down their standard of living, but it will be a better overall policy for the country. I am not a rich man, but would rather pay 40% of my wages and have a job. This will also encourage business owners to hire and others to innovate and start a business.

 Since I believe the market is taking a turn for the worse, I continue to stress ownership of assets inside a 401k and IRA's (Traditional, SEP, ROTH) and Cash-Value Life Insurance. Taxes are a huge risk to our nest egg and these mediums will help protect them. Inside these investments I like the following...Stocks-- JNJ and MO, low p/e's, strong cash flow and a great dividend. Bond Funds...stay shorter term non government. DODIX, Vanguard Short-Term Investment Grade. For Balanced Funds I like VWINX and VWELX.

 Think all of those will take care of you over the long term.

 Thanks for reading. 

2 Comments – Post Your Own

#1) On March 15, 2011 at 10:12 PM, bballinconadon (95.13) wrote:

What company do you think is the best for cash value life insurance?

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#2) On March 17, 2011 at 2:23 PM, dswinters (94.08) wrote:

Think there is several, but the industry makes it somewhat difficult to compare 'apples to apples'.

 In terms of dividend rate and financial strength, Northwestern Mutual is probably the best. However, Guardan, Mass Mutual, and NY Life are also pretty good.

 If you want a policy that is VUL (which tracks investments inside the stock market) I would go with the lowest cost provider, but if you want the managed investment side, go with Northwestern Mutual.

 My big 'learning experience' (let's try and keep this positive) from buying insurance (I have 5 policies mostly from Northwestern Mutual) is that the rep makes a terribly huge payout during the first year of the policy. Literally the sales person (call themselves Financial Reps) and they make around 50% of the pay-in amount. So, I would contact more than one rep and try and get your 'cash-value' versus the policy amount as high as possible. They have pretty good protection against each other, but this will help you.

Hope this helps. Feel free to send me an email.

derekswinters@gmail.com

Thanks for responding. 

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